AUB Group Ltd (ASX: AUB) shares are having a tough time on Wednesday morning.
In early trade, the ASX 200 stock crashed 10.5% to $30.50.
Its shares have rebounded since then but remain down 6.5% to $31.93 at the time of writing.
Investors have been hitting the sell button after the insurance broker released its FY 2024 results.
ASX 200 stock crashes on FY 2024 results
- Underlying revenue up 19.8% to $1,331.7 million
- Reported net profit after tax increased 110% to $137.1 million
- Underlying net profit after tax up 32.4% to $171 million
- Underlying earnings per share lifted 21.2% to 156.78 cents
- Fully franked final dividend up 25.5% to 59 cents per share
What happened during the year?
For the 12 months ended 30 June, AUB reported a 19.8% increase in underlying revenue to $1,331.7 million. This was driven by above-market growth in Agencies and New Zealand, which was supplemented by growth across all parts of the business.
Thanks to a 100 basis points increase in its underlying EBIT margin, due to expansion across all divisions, the ASX 200 stock's earnings grew at an even quicker rate than revenue. It reported a 32.4% increase in underlying net profit after tax to $171 million.
AUB's earnings per share grew at a slightly slower rate of 21.2% to 156.78 cents. This reflects an increase in shares arising from equity raising activities during FY 2024 to fund the acquisition of Pacific Indemnity and future accretive growth.
This allowed the company's board to declare a fully franked final dividend of 59 cents per share, which is an increase of 25.5% on the prior corresponding period.
That brought its total dividends per share to 79 cents in FY 2024, which is an increase of 23.4% year on year. This represents a payout ratio of 52.8%, which is at the low end of AUB's long-term payout ratio target of 50% to 70% of underlying profit.
Management commentary
The ASX 200 stock's CEO and managing director, Michael Emmett, was pleased with the company's performance. He said:
Financial Year 2024 was a milestone year for AUB Group. The first full year of Tysers ownership, bolstered by other international investments, exceptional growth in our managing agencies division, and continued strong performance in Australia and New Zealand, all contributed to outstanding results for our shareholders. This success was further highlighted by our recognition by AM Best as one of the top 20 leading Insurance Broking Groups in the world.
How does this compare to expectations?
According to a note out of Goldman Sachs, it was looking for underlying net profit after tax to $168.9 million and a final dividend of 57.1 cents per share.
As you can see above, the ASX 200 stock has outperformed both of these estimates with its profit of $171 million and final dividend of 59 cents per share.
This makes today's selloff somewhat surprising. Particularly given that its guidance for FY 2025 is also in line with Goldman's expectations.
Outlook
AUB is guiding to underlying net profit after tax in the range of $190 million to $200 million in FY 2025, representing growth of 11.1% to 16.9% over FY 2024.
As a comparison, Goldman Sachs was forecasting an underlying net profit after tax of $197.6 million for the year ahead.
It's possible that some analysts were expecting even stronger growth and have been trimming positions today because of this.
